Venezuela will Friday begin to expropriate some oil service providers, after the congress passed a law extending the state's control to all activities related to the oil industry.

Venezuela will Friday begin to expropriate some oil service providers, after the congress passed a law extending the state's control to all activities related to the oil industry.

"We will start to recover assets that will now belong to the state, as they always should have," President Hugo Chavez said.

The law approved Thursday by a majority of the National Assembly "reserves for the state, the goods and services connected to primary hydrocarbon activities."

It also gives local courts exclusive jurisdiction to settle disputes between the state and private companies, shielding the country from international arbitration.

Shortly after the law's passage the government announced that private contractors servicing wells, transporting workers and providing other services in the oil-rich Maracaibo Lake area will be taken over by the state-run Petroleos de Venezuela (PDVSA).

Energy Minister Rafael Ramirez earlier said the measures would not affect oil drilling firms, which have had trouble recently getting paid.

Until now, state control of the oil industry has been limited to production and exploration.

Venezuela has proven oil reserves of around 99 billion barrels and is the western hemisphere's largest oil exporter.

Ramirez said the companies to be nationalized and compensated will be identified when the law is formally published.

"Companies that are selected for nationalization will not be able to mount lawsuits in foreign countries, because the measure stipulates that disputes will be resolved exclusively by (Venezuelan) courts," Ramirez said.

Opposition lawmakers have criticized the PDVSA for running up debts and being unable to meet payments despite a months-long windfall from high oil prices.

As of September, PDVSA had 7.858 billion dollars in debt to its suppliers.

Thousands of people employed by the private contractors will work for the PDVSA as a result of the law, Ramirez said.

Union officials were divided over whether their members would benefit.